Summer holidays did not deter investors, as global ETP flows reached $39.8bn in August, bringing year-to-date flows to $213.4bn, ahead of 2015’s record-setting pace.
Similar to July, investors favored US and emerging markets (EM) equities as well as EM and corporate debt, according to BlackRock’s ETP landscape report.
With $26.7bn of the flow total going into equities, there is continued evidence of a risk-on environment, BlackRock noted.
US equities generated inflows of $16.6bn focused in large caps and with strong flows to dividend-weighted and preferred stock strategies as investors search for income.
Broad EM equity funds maintained momentum collecting $6.2bn, marking a third consecutive month of inflows, amid a leveling of commodity prices and a weaker US dollar. The category remains on record pace with $22.9bn year-to-date.
In Europe, equity inflows have picked up and are now finally in the positive in terms of flows for the year, but broad European equities were still down a further $1.3bn on August, despite evidence of buying across European smart beta towards the end of the month as investors become more selective within their exposures to the region.
Fixed Income gathered $11.6bn of inflows, concentrated around three key exposures: broad market; US investment grade corporates and emerging market debt.
“Emerging markets, across both equity and fixed income, stole the show this month. A benign dollar, stable oil and decent data in China, coupled with positive signs from the earnings side, explains why ETP equity flows into this sector show no sign of abating. For fixed income, the search for yield which is on-going globally is also a strong supportive point,” said Ursula Marchioni, chief strategist at Blackrock’s iShares EMEA.
“Over the past six months, gold has been a standout for ETP flows. With over $1bn of inflows into gold in August, it is worth noting that this is half the amount that was recorded in July and a quarter of that witnessed in May and June. Despite the recent fall in the gold price, we still consider gold to be attractive from a diversification perspective,” Marchioni added.
“Within European equities specifically, whilst broad European equity funds continue to witness large outflows, European factor funds have gathered net inflows. This divergence suggests that when investors start to reallocate back to European equities, they do so taking a precautious and selective view, rather than going into broad market exposures,” she said.